ICv2 caught up with Ted Adams, the CEO of IDW Publishing and sought his opinions and observations on a wide range of subjects. In Part 2 Adams discusses the burgeoning digital market, the impact of the iPad, Day & Date digital distribution, and the cannibalization of print sales. In Part 1 of the interview, Adams, who was one of the founding partners of IDW in 1999, talks about the current state of the market for comic books and graphic novels, the impact of Borders’ financial problems on publishing, and the move by some publishers to roll back the cover price of periodical comics. In Part 3 he discusses in details IDW’s editorial plans for 2011.

Let’s turn to digital where IDW’s been a leader. A year ago we talked about the potential impact of the iPad, which at that point was not out yet. You said, "The panel-by-panel read on the iPhone is great, we’ll see what the tablets do. It might be a good thing to see things on a full page." Now that you’ve had some to digest what comics look like on the iPad, and possibly what some of these other tablets are going to look like, what are your thoughts on the tablet and what they means to comics on digital?

The iPad is a great reading experience for comics, there’s no question. I still, and will always be, a print guy, so my preferred format is to read a print book, but the iPad is great way to read comic books and we’ve seen our revenue from digital publishing [probably] about double from where we were a year ago, so I think much of that is attributable to iPad sales. It’s been a great platform for us.

It’s still an insignificant part of our total net revenue. We are a print publisher. We’ve been aggressive in the digital space, [but] we can clearly say that it has not been cannibalizing our print sales because our print sales have been up substantially in the same period where our digital sales are up. I can tell you that at least from IDW’s perspective, the success that we’ve had with digital distribution has not cannibalized our print publishing revenue.

With that said, we’re going to continue to have product out there. We just started to release iPad graphic novels, so instead of buying them as individual comics you can buy the full graphic novel. We did the first year of Bloom Countyas a stand-alone app. It came out a couple of weeks ago, and Apple in the middle of last week promoted it in their Noteworthy section. Anytime Apple gets behind it and promotes something, sales just explode. We’ve seen extraordinary sales for that app over the past 4-5 days. It’s been in the top 10 grossing iPad book apps ever since they started that promotion. Digital is something that we’re going to be aggressive--we’ve got a team here that focuses on digital. It’s obviously a much smaller team than our print folks, but it’s an important part of our plan as we move forward.

We’ve noticed that you’re one of the only publishers available through Blackberry. Have you have good response there?

We’ve got some Transformers and Star Trek books there and it hasn’t performed nearly as well as other digital platforms. I have a Blackberry as well, and the app store on Blackberry is very primitive compared to iTunes app store. I don’t think people use their Blackberry the way people use their iPhones or Google devices or any other smart phone.

It’s the #1 smart phone platform, so theoretically the numbers are there, but it sounds like there are other barriers.

I just know as a user--I have an iPod Touch and and iPad--and I use the Blackberry as my smart phone, but my own user experience is that the app store is just not very good.

You mentioned the Bloom County book app. IDW has been a leader in having separate branded apps and you probably have more of those out there than any other company. Why are you pursuing that strategy?

What’s happened with the iTunes app store is that the marketplace has gotten unbelievably cluttered, so I don’t know how many apps there are, but there are certainly hundreds of thousands of apps available via iTunes. And once you [filter it] down into the comic books space, my guess is there are a thousand comic books you can buy via the iTunes stores. So that’s a really cluttered marketplace.

What we’re trying to do is make it easier for the fans of our core brands. So when you talking about True Blood, Transformers, Star Trek and G.I. Joe, we have free--what we call “store front” -- apps that you can download to your iPad or your iPhone. Once you have that Transformers store front on your device, it filters all of our Transformers comics into that store front. So now, instead of having to go out and search for our Transformers comics in the iTunes store, you can just open up that app and we filter all of that in there so you can see what’s available to be purchased. So if you’re a Transformers fan, you can see all the Transformers comics available that can be purchased. For us, it’s a good way to market to fans of those big brands. And we will continue to do that as we add more big brands. For us to make it work it has to be a giant brand, something like a Transformers or True Blood and then we have to have enough content to make it make sense to have a store front app for it. For example, our expectation is that when Godzilla launches in March, that’s going to be a big title for us, but we’ll only have one comic book out so it doesn’t make sense for us to have a Godzilla store front to just sell one comic book.

Archie recently announced they’re going to do day and date at $1.99. A lot of people are looking at the comics market and comparing it to the process of digitization of other media would say that’s a model that looks like where the business it headed -- having simultaneous release on print digital platforms, with the digital priced a little cheaper. What are your thoughts on that question?

I think every publisher is going to have to come up with their own strategy. We’re not going to have a universal day and date release for our comic books. I know that it’s something that direct market retailers don’t want to see happen, and wherever we can, we’re going to be respectful to that. As I said before, the direct market is far and away our biggest and most important market. At least for now, we’re not going to have a day and date release schedule for digital. Not to say that we won’t have some content day and date, but we’re not going to have universal day and date release for our titles.

And the pricing?

The pricing is again something that I think we’re all struggling with when you have a new marketplace. I’ve never seen anything more new than this digital distribution. Pricing is something that we’re all trying to figure out what makes sense. I think the expectation from a consumer standpoint is that digital should cost less than physical product. If you spend any time on Amazon and you look at the Amazon consumer reviews of books, and if the digital version isn’t priced to their satisfaction, it’s pretty unbelievable. Amazon users will give hundreds of 1-star reviews not reviewing the book at all but reviewing the pricing strategy of the publisher.

You said earlier that from IDW’s perspective, it does not appear IDW digital sales cannibalize print, and that the retailers don’t want you to go to day and day, obviously because they fear cannibalization. Based on your experience, is that a rational fear?

No, it’s not. All I can tell you is from my perspective as CEO of IDW, and our print publishing revenue is up over the last six months and our digital publishing revenue is up over the last six months, so it’s clearly not cannibalizing our print sales. Is it a rational fear from a retail perspective? I don’t know. Again, all I know is from my perspective is that it’s not, but I don’t want to be dismissive to our physical retailers that see this as a concern. With that said, I spend a fair amount of time on CBIA (Comic Book Industry Alliance) and I try to be in regular touch with the retail community--I’m heading to a ComicsPro soon. My perception is that it’s less of a concern today than it was a year ago for direct market retailers.

Hopefully they’re seeing what I’m seeing. Digital’s here; it’s not going away. There are substantially more comic book apps out there today than there were 12 months ago. I don’t think that the decline in the sales that we’re seeing in the direct market is the result of digital, what we’re seeing in the direct market is the result of editorial content.

At the GAMA Trade Show, ICv2 spoke with SJG COO Philip Reed and Munchkin Line Editor Andrew Hackard about plans for licensed games, the amazing sales growth of the brand, and the sales patterns they’re seeing.